Transcript module 18 review

module 18 review
1. what causes markets to move towards
equilibrium, even after shifts in demand and/or
supply?
2. what causes a true shortage?... a true surplus?
3. what is a government “price ceiling” and whom
is it trying to help: consumers or producers?
4. what is a government “price floor” and whom is
it trying to help: consumers or producers?
EXAMPLE: rent-controlled apartments in New York
The rent-controlled apartments Example of PRICE CEILINGS
1. why is there a shortage of apartments in
New York?
2. why are the quantity demanded and the
quantity supplied not in equilibrium?
3. which is greater: quantity supplied or
quantity demanded? how can you tell?
4. is this price ceiling effective? how can you
tell?
5. what would make this an ineffective price
ceiling?
EXAMPLE: the market for dry milk
the dry milk market Example of PRICE FLOORS
1. why is there a surplus of dry milk?
2. why is the market for dry milk not at
equilibrium?
3. which is greater: quantity supplied or
quantity demanded? how can you tell?
4. is this price floor effective? how can you
tell?
5. what would make this an ineffective price
floor?
What are the PROS and CONS of
price ceilings?
What are the PROS and CONS of
price floors?